Consensys: An overview of network activity data, Ethereum is gaining momentum
Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
Ethereum is the largest programmable blockchain in the world. It is the foundation of the future of the Internet (Web3), and the future of finance (DeFi).
Currently, more than half of the entire DeFi ecosystem exists on Ethereum, and despite being affected by market volatility and macroeconomic uncertainty, Ethereum’s participation is still high.
This article will walk you through how the Ethereum ecosystem is building for the long term and ensuring it is ready for network growth.
Like any efficient technology, Ethereum's roadmap is filled with upgrades to its infrastructure to better future-proof it.
The first upgrade, which we call "merging," will happen in mid-September 2022.
It will be a historic moment for the nascent cryptocurrency industry, and the merger will underpin Ethereum's added security, sustainability, and scalability.
Currently, the Ethereum network has two blockchain layers running in parallel - the layer running Proof of Work (PoW), known as the Execution Layer (Ethereum's historical state and block production), and the layer running Proof of Stake (PoS). layer, called the consensus layer.
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Why is Ethereum dominating DeFi?
Today's DeFi ecosystem is worth $62.6 billion, and Ethereum accounts for the majority of the entire DeFi ecosystem, with a total value locked (TVL) of $36.7 billion.
Some of the reasons for Ethereum’s dominance in DeFi are:
Most of the popular DeFi applications are built on Ethereum, such as MakerDAO, Aave, Uniswap, and Curve.
Ethereum also benefits from a strong developer and user community, specifically the Ethereum CoreDevs, who work to improve the network by creating documentation and rolling out network updates on a regular basis.
These resources help maintain a strong, decentralized network and drive further adoption.
The network has seen skyrocketing numbers for adoption and utilization, a strong signal of network maturity.
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network activity
Since January 2020, the total number of unique addresses on the Ethereum network has more than doubled to over 200 million, demonstrating the popularity of the Ethereum network among Web3 users.
The number of active Ethereum addresses has also trended upwards since January 2020 and is currently above 504K despite the recent market downturn.
Users participating in the network despite wild market volatility shows that Ethereum’s use cases go beyond price activity.
In contrast, growth on Fantom has dropped 70% since the market crash in May.
As a sign of the maturity of the Ethereum network, gas fees have dropped steadily since January of this year.
Even as network activity increases, they become more predictable.
Low gas fees make Ethereum transactions cost-effective and independent of network activity.
Therefore, users don't need to worry about paying $100 to complete a transaction when the network is congested.
Since January 2020, Ethereum’s daily transaction volume has been on the rise and has stabilized.
Over the past 12 months, an average of more than 1 million transactions were completed on Ethereum every day.
As a result, users continue to use the web despite Web3 and global macro market volatility.
It's also a signal that meaningful applications with real-world use cases are being built on Ethereum.
To get an idea of the scale of the number of transactions happening on Ethereum, I give an example: In 2021, Ethereum will process more transactions than Visa, the largest payment processor in the world.
Ethereum processed $11.6 trillion worth of transactions, while Visa processed $10.4 trillion.
A strong metric for determining blockchain network demand is protocol revenue— that is, the amount that users are willing to pay for transactions made on the blockchain.
on the other hand,
on the other hand,The main expenditure of the blockchain revolves around the resources it spends in fortifying the integrity of the network and maintaining security.
Almost every blockchain currently spends more money securing their network than they earn from selling block space.
Thus, revenue provides a better perception of network demand than simply relying on the total number of transactions.
While using Tron or Solana may be cheaper than Ethereum, users may be willing to pay a premium to use Ethereum due to factors such as better security and reliability of the network.
Since mid-March of this year, ETH has generated $1.8 billion in protocol revenue, the highest among the top 20 blockchains including Avalanche, Solana, Polkadot, and Polygon.
For comparison, consider Avalanche: it generated the second-highest protocol revenue during the same period, also generating only $72.6 million.
During the same period, Ethereum accounted for more than 90% of the protocol's total revenue compared to other Layer 1 (L1) networks.
Staking on Ethereum has gained significant traction since December 2020.
As of August 19, 2022, more than 13.3 million ETH are staked, accounting for nearly 11% of all ETH supply.
Summarize
As we saw above,The number of users and liquidity coming to Ethereum is unmatched by other L1 networks.
Because of this high liquidity and large user base, Ethereum has become attractive for developers who choose to build between different blockchains.
This popularity helps create a liquid moat for Ethereum.
Most decentralized applications (dApps) with high TVL and Web3 usage are native on Ethereum.
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